Surprised that pharma companies have the lowest P/E ratios in 20 years? According to a recent Bernstein research report, more than half a drugmaker’s market cap reflects the strength of their pipeline, more so than their operating results. In this installment, we will explore new approaches being taken to provide products that the market wants with claims the FDA will want to approve, moving the sales issue from positioning the product in the doctor’s office (some might call it ‘spin’) to execution and education of the label.
Pharma marketers can no longer establish theoretical targets in the early days of Target Product Profile development. “Working with whatever comes out of trials”, which has long been the marketer’s lot in life, forces marketing to try and overcome product deficiencies with greater application of field sales force pressure, DTC advertising, and in some cases, additional trials aimed specifically at achieving claims that weren’t part of the original trials. myipaddress These tactics are extremely expensive, and add risk to the already-daunting financial challenge facing most new drugs.
Forward-thinking firms have decided “enough is enough”, and are changing the way they prepare for clinical trials by adding more commercial planning up front — in some cases organizing themselves differently, with commercial insight staff inserted into the clinical R&D department. This commercial input involves forward planning (or “reverse engineering”?) the product’s label from a marketplace perspective, by studying the drivers of product value that will cause physicians to prescribe this drug; the drivers that will cause a patient to take and pay for the drug in light of the co-pay associated with that drug versus generic or formulary-preferred alternatives; and the drivers that will cause payers to give the drug preferred formulary status.
When these commercial inputs are used to inform the clinical development plan, thereby ensuring that all efforts are coordinated toward delivering a label that the market is ready to accept, the result is an increased likelihood of uptake and an improvement in the launch plan’s effectiveness in delivering commercial success.